The WACC of Shinsei Bank Ltd (8303.T) is 5.6%.
| Range | Selected | |
| Cost of equity | 7.50% - 12.40% | 9.95% |
| Tax rate | 12.40% - 16.20% | 14.30% |
| Cost of debt | 5.00% - 5.00% | 5.00% |
| WACC | 5.1% - 6.1% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 1.4% | 1.9% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 1 | 1.4 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.50% | 12.40% |
| Tax rate | 12.40% | 16.20% |
| Debt/Equity ratio | 3.39 | 3.39 |
| Cost of debt | 5.00% | 5.00% |
| After-tax WACC | 5.1% | 6.1% |
| Selected WACC | 5.6% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 8303.T:
cost_of_equity (9.95%) = risk_free_rate (1.65%) + equity_risk_premium (6.60%) * adjusted_beta (1) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.